Suraj Singh
in Property Law
Asked August 11, 2014

Part-Performance under Transfer of Property

  • 1 Answer

A enters into a contract with B for purchase of land owned by B. A transfers the full consideration. A and B separately had a Memorandum of Understanding that B will transfer possession and title only if A get X, Y and Z approval. A failed to obtain the said approval (and the same is pending). Subsequently, A has somehow taken physical possession of the property. Whether A can claim that the property now belongs to him since he has done part performance (under Section 53-A of the Transfer of Property Act) and enforce the contract (i.e., force B to hand over the possession of the property despite A handing over the permits as stipulated earlier)?

Answer 1

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This dispute pertains to Section 53-A of the Transfer of Property Act 1882, it has highlighted the doctrine of part performance. It is an instrument to protect the buyer from the fraudulent aspects in the transfer if any, it does not affect the right of the transferor (the person who transfers the property under the sale) if he has lawful rights to hold back the property. Here in this case party ‘A’ would not be benefitted under this section as party ‘B’ has a valuable ground to hold back the possession. The Bombay high court in the case of Sadashiv Chander Bhagmare v. Eknath Pandharinath Nangude held that section 53A gives statutory right which is available to the transferee for consideration in possession of the property had under the contract. In terms of the section, so long as the transferee has done and is willing to perform his part of the contract or, in other words, is always ready to abide by the terms of the contract and has performed or is always ready and willing to perform his part of the contract, the transferee is entitled to avail of this statutory right to protect his possession as a shield but not as a sword. The right to retain possession of the property rests on the express provisions of the Act and on his compliance thereof. A person who pleads equity must come to the Court with clean hands and he alone is entitled to the benefit of this section. The section does not create a right or title in the defendant. It merely operates as a bar to the plaintiff to assert his title. The transferor is barred from enforcing his rights other than those expressly provided by the contract. The section, therefore, imposes a bar on the transferor, when the conditions mentioned in the section are fulfilled by the transferee, and the section also bars the transferor to enforce his rights against such transferee or person deriving right, title and interest from such transferee. This section is designed to protect the buyer’s right over the property where the seller fraudulently deprives the buyer from enjoying his right over the property. This section is only applicable when the buyer had already performed his part of the contract unless this is not applicable. The above view is supported by the Supreme Court judgment in case of Rambahu Namdeo Gajre v. Narayan Bapuji and Nathulal v. Phool chand . In the above cases it was held that the doctrine of part performance aims at protecting the possession of the transferee provided certain conditions contemplated by Section 53-A are fulfilled. In the present case party ‘A’ and ‘B’ had a Memorandum of Understanding between them that if party ‘A’ produces the X, Y and Z approval to B. Only then he will transfer the possession and the title of the property to party ‘A’. Failing which ‘B’ denied the ownership right of the property to party ‘A’. Here B has a lawful ground to deny the right of party ‘A’ as he has failed to produce the above said approvals. Lastly, it can be concluded that S.53A of the Act will come into picture for protection of the buyer, only when buyer has performed his promises substantially, and is willing to perform remaining promises, if any, but in this case buyer not performed his promises when required to be met as per Memorandum.
Agree Comment 0 Agrees over 2 years ago

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